Does the Big O Tires FDD include a schedule outlining royalty rates?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
SCHEDULE 9 ROYALTY RATES
1. Terminology.
- a.
The Franchise Agreement to which this Schedule 9 is attached is hereinafter referred to as the "Agreement".
- b.
Terms used in the Schedule 9 have the same meaning as set forth in the Agreement, except as otherwise provided in this Schedule 9.
Terms used in this Schedule 9 with the same meaning as set forth in the Agreement include (but are not limited to):
(i) Adjusted Gross Sales Gross Sales excluding Gross Sales (a) to National Account Customers and Key Account Customers, (b) of Farm Class Tires, (c) on Excess Service Department Sales, and (d) on which no royalty is due and not otherwise excluded from the definition of Gross Sales.
(ii) Adjusted Gross Sales Royalty Rate The percentage applied to Adjusted Gross Sales to determine the Adjusted Gross Sales royalty fee, which percentage is the Matrix Royalty Rate.
c.
The following abbreviations when used in this Schedule 9 have the following meanings:
(i) AGS Adjusted Gross Sales.
(ii) AGS Royalty Rate Adjusted Gross Sales Royalty Rate.
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Royalty Rates Applied.
The Royalty Rate on Gross Sales to National Account Customers and Key Account Customers will be 2%.
The Royalty Rate on Gross Sales of Farm Class Tires will be 2%.
The Royalty Rate for the Excess Service Department Sales will be 2%.
The Royalty Rate on AGS will be the AGS Royalty Rate.
Current Royalty Matrix.
The Royalty Matrix in effect as of the date of the Agreement is attached as Annex 1 to this Schedule 9 and applies to AGS Sales earned in the calendar year specified in such attachment or until the next Royalty Matrix becomes effective.
Updating the Royalty Matrix.
The Royalty Matrix will be updated for each calendar year by Big O and distributed by Big O to Franchisee.
Each Royalty Matrix will be for the specified calendar year.
Big O will make such updates in accordance with methodologies established by Big O in accordance with the recommendations of the franchisee audit committee of the Franchise Advisory Council.
Source: Item 23 — RECEIPTS (FDD pages 102–535)
What This Means (2025 FDD)
Yes, according to the 2025 Big O Tires Franchise Disclosure Document, Schedule 9 outlines the royalty rates. The royalty rate for Gross Sales to National Account Customers and Key Account Customers, Gross Sales of Farm Class Tires, and Excess Service Department Sales is 2%. The royalty rate for Adjusted Gross Sales (AGS) is the AGS Royalty Rate, which is determined by the Royalty Matrix.
The Royalty Matrix in effect as of the date of the Franchise Agreement is attached as Annex 1 to Schedule 9. This matrix applies to AGS Sales earned in the specified calendar year or until the next Royalty Matrix becomes effective. Big O Tires updates the Royalty Matrix each calendar year and distributes it to franchisees. These updates are made following methodologies established by Big O Tires, based on recommendations from the franchisee audit committee of the Franchise Advisory Council.
For franchisees operating Multi-Store Royalty Groups, royalty rates may vary between stores. Stores converted from Product Distribution Franchises to Business Format Franchises (BFF Conversion Stores) are subject to a royalty matrix applicable to BFF Conversion Stores, while new Business Format Franchise stores are subject to the Royalty Matrix applicable to new Business Format Franchises, which is included in the FDD as Schedule 9, Annex 1. The gross sales of all stores in a Multi-Store Royalty Group are combined to determine the applicable Royalty Rates. If the Matrix Royalty Rate changes during the year, Big O Tires will use its discretion to apply the rates to sales for the periods in which those rates were in effect.